On November 5, 2019, the U.S. District Court for the Northern District of California ruled in favor of Theranos founder Elizabeth Holmes and former Theranos president Sunny Balwani, in a battle over access to government documents. While this represents a small victory for these defendants, it may not ultimately impact the outcome of this high-profile criminal prosecution.
In response to charges of wire fraud and conspiracy to commit wire fraud against key officers of the now-extant Theranos, Holmes and Balwani moved to compel federal prosecutors to produce documents held by FDA and CMS. Under Ninth Circuit case law, DOJ prosecutors have access to discoverable material, even if held by other government agencies. The prosecution maintained that it could not be compelled to produce documents from governmental agencies outside DOJ because it lacked access to such documents. The court disagreed, however, noting that Rule 16 “grants criminal defendants a broad right to discovery.” The court noted that while FDA and CMS are not a part of DOJ, they clearly have been involved in the litigation, pointing to the significant access, communication and assistance by-and-between the three Agencies. The government was thus ordered to produce the documents as part of their Rule 16 obligation and to “assist the Agencies however possible to ensure the timely production of documents.”
Defendants also identified several deficiencies relating to the Agencies’ preservation efforts of the documents the government had produced. For example, defendants claimed, FDA, rather than produce documents in whole or in original format, “produced [over 1,000 emails] as fragmentary documents – i.e., that the produced emails omit portions of the original email, such as the ‘to,’ or ‘from,’ or the body fields….” Defendants also complained FDA failed to run appropriate search terms and, in its order, the court dictated the use of specific terms in FDA’s files: “LDT,” “Laboratory Developed Test,” “Theranos,” “fingerstick,” “finger stick,” and “nanotainer.”
Lastly, the court ordered the parties (including FDA and CMS) to meet and confer on outstanding discovery issues, such as production of employee text messages and de-duplication of documents. The court set a tight production deadline of December 31, 2019, just in time for New Year’s celebrations.